Q2 19/20

Nov 1, 2019

Quarterly report

Good afternoon, ladies and gentlemen. On behalf of Batlivala & Karani Securities, it gives us great pleasure to once again host the management of Indian Oil Corporation for the 2Q FY20 conference call. Without much ado, I would like to hand over the call to the management of Indian Oil Corporation for the initial remarks. Over to you, sir. Yeah. Thank you, Bhavin. Good afternoon, friends. We from Indian Oil are happy to be before you, in the wake of the Q2 results. From the management side, we have with us our Director (Finance), Mr. Sandeep Kumar Gupta, and General Manager of Corporate Finance, Mr. Rohit Kumar Agarwal, Mr. Prabhat Himatsingka, Deputy General Manager of Corporate Treasury, and myself, Mathew, the CGM, Corporate Treasury. Before we go ahead with the question and answer session, as usual, as we have been doing in the past, I would request Director (Finance) to give his initial remarks covering the whole facet of the accounts. Thereafter, we'll be taking question and answers from your side. Thank you, and over to Director (Finance). Yeah. Dear investors and analysts, good afternoon to all of you. Festive greetings for the season which has gone by, and wish you a very happy New Year. I take this opportunity to welcome all of you to the conference call organized by us, post announcement of the second quarterly results for 2019/2020. While you would have gone through the accounts hosted on the website and also through the updates received by most of you, I would like to briefly dwell on the results to provide additional clarity and thought and insights. First, on the highlights. Though the numbers are not very attractive, yet I would say that we have been able to make some profits despite the inventory losses, et cetera. The average price of crude, that is Indian Basket, which is, say, 75% Oman Dubai and 25% Brent, during this quarter was $61.69 per barrel, which is a decrease of 9% from the average price of the immediate preceding quarter, that is Q1 FY20. If we compare on a half-yearly basis, the average price during the current half year has been $64.75 per barrel, as against $73.68 per barrel in the corresponding quarter of FY19. This is a clear indication of the fact that despite global events, the crude prices have remained subdued. You would have seen from the data published by PPAC that petroleum product consumption in the country for the half year ended 30th September 2019 is slightly higher than that of the corresponding period of last year. Seasonality is a factor in the consumption of petroleum products in the country. Therefore, it would be appropriate to compare the consumption of the current quarter vis-à-vis the corresponding quarter of the previous year, and not with the immediate preceding quarter, because Q2 in India, we have a monsoon period. Accordingly, the current quarter consumption is marginally higher than the corresponding quarter of FY 2019. With respect to the crack spreads, MS cracks with reference to Indian Basket, has witnessed an upside during this quarter as compared to the preceding quarter. However, it is still 18% lower than that of Q2 of FY 2019. Similarly, for HSD, the crack spreads during this quarter has also been higher by about 32% as compared to the preceding quarter. However, it is only marginally higher by about 4% than the corresponding quarter of FY 2019. However, in the petchem space, the spreads have witnessed a decline over last one year. Spreads of polymers in this quarter were 6% less than the previous quarter and 15% less than the corresponding quarter of FY 2019. In case of PTA, the spread during this quarter was about 14% less than the previous quarter. While comparing with the corresponding quarter of FY 2019, it is 26% lower. With respect to MEG, the spread in the current quarter has shown an upward trend as compared to previous quarter. However, while comparing to the corresponding quarter of FY 2019, the decline over the year is much more pronounced. There is a sharp fall of 69%. In view of above factors, which do play a crucial role in the profitability of our business, this quarter, we have registered a profit after tax of INR 564 crore. It is way below the preceding quarter of INR 3,596 crore. One of the major reasons is the inventories. In the current quarter, there has been an inventory loss of INR 1,178 crore as compared to an inventory gain of INR 1,233 crore during the preceding quarter. From a half-yearly perspective, the PAT is INR 4,160 crore as against INR 10,078 crore in the H1 of FY 2019. However, it has to be mentioned that during H1 of financial year 2019, there were significant inventory gains as compared to H1 of current year. Revenue from operation during this quarter is INR 132,376 crore as against INR 150,135 crore in the preceding quarter of the year. Coming to the business verticals. First, refineries. The throughput during the quarter was 17.5 million metric ton, which is marginally higher than the preceding quarter, but was slightly lower than the corresponding quarter of financial year 2019. The distillate yield was 79.7% during this quarter, which is slightly lesser than the previous quarter, but marginally better than the corresponding quarter of financial year 2019. Fuel and loss during this quarter was 8.9%, whereas during the preceding quarter it was 8.7%. Consequently, the refineries have registered a GRM of $1.28 per barrel during this quarter as compared to $4.69 per barrel during the previous quarter. GRMs after stripping off inventory impacts and factoring in price lags for the quarter is $4 per barrel as against $2.30 per barrel for the previous quarter. If we compare on a half-yearly basis, the normalized GRMs for the current half-year is $3.20 per barrel as against $5.50 per barrel in the corresponding period of last year. As mentioned earlier, the upside in the cracks of both MS and HSD during the current quarter as compared to the preceding quarter is the reason behind the improvement in GRM. However, the decline in GRMs from a half-yearly comparison is due to the fact that the cracks of both MS and HSD in the H1 of financial year 2019 was higher as compared to the current half-year. Coming to pipelines, the capacity utilization was about 92.2% during this quarter, as compared to 92.8% in the previous quarter. Our pipelines continued to generate stable returns, giving an EBITDA of about INR 1,587 crore during this quarter, which is about 2% lower than the preceding quarter, and almost at par with the corresponding quarter of financial year 2019. The current EBITDA on a half-year basis is almost at par with the corresponding period of last year. Coming to marketing, the product sale during this quarter was 20.181 million metric tons as compared to 21.604 million metric tons in the preceding quarter. On a half-yearly basis, they have remained more or less flattish. That is at 41.8 million metric tons in H1 of FY20 versus 42.1 million metric tons in H1 of financial year 2019. Accordingly, the marketing EBITDA for this quarter stood at INR 3,813 crore as against INR 4,565 crore of the previous quarter. The marketing EBITDA for the corresponding quarter of financial year 2019 was INR 4,210 crore. While comparing the marketing EBITDA on half-yearly basis, it is seen that the EBITDA for H1 of financial year 2020 is INR 8,378 crore as against the EBITDA of INR 8,579 crore in H1 of financial year 2019. Thus, the marketing EBITDAs are stable. Coming to petrochemicals. During the quarter, the petrochemical business reported an EBITDA of INR 774 crore as against INR 686 crore in the previous quarter. However, while comparing with the current half-yearly performance with that of the corresponding period of last year, there has been a sharp downside in EBITDA. The major reason is due to the shrinkage of petrochemical spreads in polymers, MEG, and PTA. Moreover, the PTA unit was under shutdown during the first half of the current year. The PX/PTA plant has commenced production during the second quarter. We believe, as we go forward, the petchem will continue to contribute to the bottom line of the company. On the borrowings front, you would have seen that the borrowings as on 30th of September 2019 has decreased by about INR 6,000 crore and is at INR 80,382 crore level as compared to INR 86,359 crore as on 31st March 2019. However, during the current quarter, there has been an increase of about INR 8,000 crore as compared to the previous quarter. The increase is mainly attributable to exchange translation, CapEx, and dividend payouts, et cetera. I will end my briefing here, and we will take your questions now. Thank you very much. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Participants are requested to restrict to two questions in the initial round and join back the queue for further questions. First question comes from Mr. Vinit Joshi from Goldman Sachs. Please go ahead, sir. My first question is on normalized GRMs. I am trying to understand the underperformance of your core GRM, which removes inventory loss versus the normalized GRM, which you report. Core GRM was down QoQ while normalized GRM had gone up. What is the reason for that? Is it just lag impact, or does it also have to do with crude premiums? Can you please elaborate on that? Could you repeat the question? Can you kindly repeat the question? Yes, the question is that your core GRM, which is basically your reported GRM, Yeah. After adjusting for inventory loss, that has come down QoQ. Last quarter it was 3.4 or something. This quarter it's $3. But your normalized GRM, which you just announced, that has gone up to $4 in the quarter from $2.7 last quarter. I'm just trying to understand why your normalized GRM is up while your core GRM is down. Is it something to do with the lag impact, or is it something that the crude premiums have gone up, that's why you're not able to realize the GRM that you should have? First, I think I will make a correction here. The reported GRMs in this quarter is 1.28, whereas in the preceding quarter, it was 4.69. And the normalized GRM in this quarter is 3.99, to be very precise. That is what we told as four. And the Q1, that is in the preceding quarter, it was 2.27. Yeah. Those are the directions of numbers. Yeah. The inventory losses in this period is INR 1,807 crore, whereas in the preceding quarter, it was a gain of INR 2,362 crore. If you see the last quarter, reported GRM was $4.69 per barrel, but the normalized GRMs, if we strip off the inventory gains, remains only $2.27 per barrel. As against that in the current quarter, the reported GRM is $1.28. But if we strip off the inventory losses in this period, then the GRM increases to $3.99 per barrel. All right. My second question is, last year in the second half, you had a big negative working capital drag, which seems to have reversed in the first half. How should we think about the impact from working capital on cash flows in the second half of this financial year? We expect it to be stable now, provided the- Crude prices provided the crude prices remain stable, which perhaps, is the situation now. The crude prices are in a finite range, so we believe it to be stable. All right. Thanks a lot, sir. Thank you, sir. Next question comes from Mr. S Ramesh from Nirmal Bang. Please go ahead, sir. Yeah. Good afternoon, gentlemen. Thank you very much. Can we understand the reasons why the marketing EBITDA is down, both in terms of the first quarter as well as the second quarter last year? Last year, you mean to say? Yes. I am saying, if you look at it from the numbers you have given, the marketing EBITDA for this quarter is INR 3,800 crores compared to INR 4,210 crores, which you mentioned for the second quarter last year. Even on a sequential basis from first quarter, this year it is down. Yeah. If you remember in the last conference call, we had mentioned to you that this year, of course, the year that we had mentioned last year was slightly abnormal in nature. There were many questions asked, would you continue at the same rate? We had mentioned that point of time that there will be some correction, and after the correction, it will be stable enough. This is the correction point that has taken place, and you will find that it is quite stable now. For that, you need to compare the earlier preceding quarter. You will find that it was 4,500 with an inventory gain there. You will find that it is almost on an even plateau now. You cannot expect the abnormals to be there as it was in last year. Last year, we had some abnormalities, but this year it is going to be steady. Okay. Now in terms of If you compare the previous year, you will find it was quite low because your comparison is going for two years hence. If you look at the year before that, it was quite low. It jumped up, and that gave a lot of positivity to the sector. But then we did mention that there will be corrections, and this is the time when the corrections has taken place. Okay. In terms of the petchem business, what is the outlook going forward? You have had operational setbacks and the spreads are low. What is the sense in terms of when you see the polymer and the PTA spreads improving and what is the kind of operating rates you are likely to see in the second half and next year? Because I think you are also planning some shutdowns. Operationally, I think the plants will now operate at full levels. However, we cannot again anticipate what is going to be the spreads for petchem. If they improve, definitely we will generate good returns from petchem as the operational levels are going to be steady now. Does that include the new polypropylene plant in Paradip? Is that also up and running and in full capacity? Yes. That has started operating, and it has given a profit also. For the month of September, we have earned about INR 15 crore out of that unit. The margins will also start coming from that. So that PP plant is operating at full capacity, or what is the volume now? No, it is not operating at full capacity. Out of two trains, one train we are operating as of now. Okay, sir. Thank you very much. I'll come back. Thank you, sir. Next question comes from Mr. Probal Sen from Centrum Broking. Please go ahead. Thank you for the opportunity, sir. I have two questions. One was, can we get a sense, one has seen that borrowings have come down, as you mentioned, and in the cash flow statement also, there's quite a few adjustments for repayments that come across. So has the DBT outstanding, which was at about INR 97 billion, if I remember from last quarter, has that come down materially? And what is the status of the payment cycle now? Is it coming every month or is it still coming only in larger lags? That was my first question. What is- Government outstanding. Government outstanding? Yeah. Government outstanding. Yes, sir. Yeah, it is about at INR 9,800 levels as of now. It is pending since, say some amounts since February 2019. But then there is a regularity of payments now. We are receiving the payments with fair regularity. So we do not expect the outstanding, at least in the next quarter, to go up. But as of now, it is still around 90, as you said, INR 9,800 crores. INR 9,800 crores. Yes. Okay. The second question was the throughput from Panipat actually fell quite sharply in September. Now forgive me if you have said this before. Was there a planned shutdown there, or what was the reason for that? Yeah, it was a planned shutdown. What was the reason for the same, sir? Currently, we must have told earlier also that current year all our units will have shutdowns to be ready with BS-VI products, I must say, which is the Okay. Right. In line with that only we are taking shutdowns of various refineries. Okay. Sir, one last question, if I may. Can you just give us some CapEx guidance for this year? And if you can break it down in terms of segments, that will be very helpful. We have a target of about INR 25,000 crore for the current year, and we have spent about INR 9,800 crore till now, till September. We are likely to meet that CapEx target of INR 25,000 crore. Okay. Any major projects you can highlight, sir? What the money is going to be spent on this year? Mathew, can you? Yeah. Some of the payouts will be for the BS6 project, which is absolutely going on right now, and there would be the INDMAX Mangalore refinery, which is also on stream, which is being implemented. Then you have some smaller brownfield expansions coming up. That should be initial expenditures. You will have some pipelines expenses for the expansion of pipelines, that is Paradip Hyderabad pipelines or CGD projects. Then in marketing, you will have new terminals and depots coming up with new cylinders and pressure regulators and, of course, some modernization of ROs. And of course, petchem, there will be some spillover of the expenditure related to polypropylene of Paradip and some expansion plans coming up for MEG. And we also have something for gas and alternate energy. This will be the major constitution of the expenditure that we will be doing this year. Okay. Thank you very much, sir. I will come back if I have more questions. Yeah. Thank you, sir. Next question comes from Pinakin Parekh from JP Morgan. Please go ahead. Yeah. Thank you very much. My first question is, when we look at refining margins of IOCL stripped off the inventory gains and price lags, you mentioned it was $4 a barrel, and this seems to be substantially lower than the benchmark refining margin. Just trying to understand why is it such a large deviation versus the benchmark, and can this narrow going forward? And also, the cost seems to have been risen. Is it just because of the Panipat shutdown, or have the cost for refining also moved higher? As far as benchmark, I think you are referring to Singapore benchmark margins. Is it? Yes, sir. There is a variation in our normalized margin with our Singapore benchmark margin. We will have to look into the reasons whether there is any change in the methodology of Singapore benchmark margins or maybe the components which are considered for that, the pricing for various grades. We will have to look into that. We are yet to analyze that. Understood, sir. What about the refining operating cost? Has there been any increase in this quarter? Because on an implied basis, there seems to have been increases on a per barrel basis. No, there is no increase. In fact, we are seeing that it is practically same as compared to the corresponding period of last year. Understood, sir. Thank you very much. Thank you, sir. Next question comes from Sabri Hazarika from Emkay Global. Please go ahead. Yeah, good afternoon, sir. I have three questions. The first one is, of course, on the debt level. So currently, your debt is around INR 80,000 crore, which is the gross level. Is there any guidance? Is there any targeted debt levels which you are currently having, whether reducing it or probably maintaining at these levels? See, the borrowing levels are depending upon the CapEx plans also. Right now, from the CapEx plans that we have got right now, probably we will be maintaining these levels except for, of course, the mismatches that can happen during the end of the year because of the excise duty payments which come on the last day of the year. Probably you may have a mismatch to that extent. Otherwise, probably, this will be a very okay level to maintain. If you see from the debt-equity ratio, we are just at 0.79, 0.78. 0.74 to be precise. 0.74 to be precise, and therefore, we are much lower than the one is to one normally which people try to look as benchmark. Well, this borrowing level of INR 80,000 crore also includes about INR 7,000 crore of financial obligations, which is an accounting requirement. This is not pure borrowing. We expect the borrowing levels to be around this level only. I say they will remain perhaps at this level, at least in the next quarter. The last quarter, we cannot predict. That will depend upon the government dues. That we will have to see, whether the government dues rise or not. Right, sir. Second question is on your petchem. You said that your petchem spreads are quite weak, and you had a shutdown also during the quarter. Still, the EBITDA on a quarter-on-quarter basis, that is Q1 versus Q2, that has increased. Are there any provisions, anything of that sort why the petchem EBITDA increased? No, as we mentioned earlier also and some time back also, our PTA plant was totally under shutdown for Q1, and it has started during Q2. That is the reason for some upside there. But the petrochemical spreads for whether it is polymer or PTA or MEG continues to be very weak, and that has definitely impacted the desirable margins. All right, sir. Just one figure I wanted. You basically report a figure called gross margin of petrochemicals. Do you have that number for FY 2019 and for this quarter? I presently do not have. Perhaps we will give you subsequently. All right, sir. Just one last question. Any comment on the BPCL stake sale? Would you be looking into it or anything on that side? Let us see. If we receive anything officially, we will be able to examine and comment on that. But you are open to looking at BPCL? We will have to see what is the package on the offer. We do not know whether the entire BPCL block is on offer or some part of it is on offer. We will have to look into it. Okay, sir. Thank you so much. Thank you, sir. Next question comes from Vidyadhar Ginde from ICICI Securities. Please go ahead. Yeah. Afternoon. My question was on this BS6 related shutdown. Would that have affected refining margins to some extent in the second quarter? Any indication on how that could impact throughput as well as which refinery secondary processing units would be shut down in Q3 and Q4, if you could give us some guidance. Yeah, definitely there is some impact of BS6 shutdowns on our refinery performance and consequently on the GRM. As can be seen, the throughput increase is also not that much there. Our fuel loss, these numbers are also a little subdued. Since some shutdowns are still pending, there will be some pressure on the GRMs because of this. But in Q2, which refineries had a Euro 6-related shutdown and for how many days, if you could let us know that. We will have to give those details separately. Let us- I am talking of the previous quarter. Do we have Vidyadhar, I think, to get into those nitty-gritty, we will have to give you separately. Okay, no problem. because there are different units in each refinery, different units for different days, for different periods. Okay. So we take it offline, sir. What I would like to tell you is that we have finished with the Panipat refinery, Barauni refinery, and Digboi refinery. Those have been finished with. There will be other- Panipat, Barauni, and? Digboi. The other refineries will have a shutdown going into this third quarter also, and in the fourth quarter, a bit of it. All these three refineries which you mentioned, were they having the shutdowns in Q2, or some of them were in Q1? Some of them were in Q1 also. Okay. Q1 and then Q2 spilled over to Q3. The details will be given to you afterwards. Sure. Last question on any indication on what you would do on the tax rate. Are you likely to stick to the old regime or We have Are you still evaluating that? Yeah, we have MAT credit carrying forward, and we are a high CapEx company, so we are evaluating that. We will take a call at an appropriate time, perhaps towards end of the year. Okay. Thank you. Thank you, sir. Next question comes from Mr. Rakesh from HSBC. Please go ahead. Yeah. Thank you for the opportunity, sir. Is it possible for you to give the breakup of the expected CapEx for this year? Secondly, what are your expectations on this quarter's and next quarter's GRM, considering there has been a lot of volatility on the freight rates? Has it impacted you guys, and if yes, how is the market behaving now? If you could throw any light, that would be very great. Yeah. First, on the CapEx, we said INR 25,000 crore is the CapEx target for the year. We have spent about INR 9,800 crore till September, and we expect to meet our target of INR 25,000 crore for this fiscal. The broad breakup between refineries and other verticals, say, it is about INR 7,300 for refineries, about INR 5,600 for pipelines, about INR 6,500 for marketing, INR 1,000 crore for, say, E&P, about INR 1,500 crore for petchem, and the residual for other businesses. Now coming to the freight rates, though it had ballooned to a high level, but now very quickly they have come back almost to the same levels as was prevailing earlier. While there may be some impact, but perhaps that is immaterial. We do not expect that to affect our GRMs going forward. Understood, sir. Sir, if I could just follow with one more. Now, given the BS6 project is near completion, and April 2020 it gets rolled out to the entire country, what are the incremental margins either in refining or marketing, you guys are expecting? If I were to slightly ask this question differently, you have obviously three companies have invested massive amount of money. So what is the expected returns out of these projects, and how do we think about you generating incremental margins from these projects? These calls on the pricing are yet to be taken. Let us see, because we will have to see what are the differentials prevailing in the international market and to what extent it can be recovered from the domestic market. Now that four or five months are still remaining, when these BS6 supplies are to be started from 4/1/2020, we will take a call subsequently. We have not yet formed. Understood, sir. Sir, one last question. Has entire throughput of petrochemical plants now stabilized, or there are still some plants under shutdown? Are we resting on- No, they are stabilized. Understood. Thank you very much, sir. Thank you very much, and all the best. Thank you, sir. Next question comes from Yogesh Patil from Reliance Securities. Please go ahead. Thanks for taking my question, sir. Sir, I have two questions. First of all is for marketing segment, how many new petrol pumps addition expected for FY 2020 and 2021? Okay. The second question, in the last one year, sir, we have lost around 0.7%-0.8% in petrol and diesel market share to the private players. What is your strategy to erase the losing market share? Can you throw some light on both the questions? ROs, we do not have the number for 2021. But generally, we do about 1,500 to 2,000 per annum. That should be the level. Let us see. We do not have the number right now. Sir, in the first half FY 2020, we have added only 400. Will you be maintaining the higher run rate to achieve the target of 1,500 in a year? We will look into this information and provide you subsequently. Okay. What about the market share, sir? Yeah, market share, we are having a lot of strategies to sort of clinch back the lost market share, or at least erode further loss of market share. Those are matters of strategies, which, I'm sorry, I will not be able to divulge here. Okay, thanks. Thanks a lot. Thank you, sir. Next question comes from Amit Rustagi from UBS. Please go ahead, sir. Yes, sir. Two questions from my side. First, relating to the operating cost for the refining business. Is there a substantial increase in the refining operating cost in the last one year? No, it is not. There is no increase. Sir, but when we look at the numbers which are reported by the company, we are witnessing a significant increase in the operating cost. I can tell you the mechanism. You are reporting the reported GRMs, and you are reporting the EBITDA. The difference between the GRMs and the EBITDA, we are considering as operating cost. Is that correct? That may be because of foreign exchange fluctuation. In this period, there is a loss of foreign exchange also. Sure. Okay. That is also booked on segment-wise basis. At least for crude, it is booked entirely to the refinery division for the refinery segment. Perhaps that may be the thing which may be bothering you. Otherwise, Okay on operating cost front, it is stable. Then what is the normalized operating cost as per your calculations, if you can share that? You want in what, dollar per barrel terms? Yeah, dollar per barrel or rupees per barrel, whatever you want to share. Yeah. It is $3 per barrel. All refineries put together, old, new, everything, $3 per barrel, including depreciation, but excluding foreign exchange fluctuation. Sir, stripping off depreciation, because I'm referring to the cash cost. Stripping off it is 2.04. 2.04. So around $1 is the depreciation for Yes. Okay. Sir, second thing about the debt part. In the first half, versus INR 25,000 crore, we have done only INR 10,000 crore CapEx. So remaining INR 15,000 crore CapEx is likely to come. And similarly, in the first half we have received some payments from the government, while in the second half, the receivables from the government will keep mounting. Given that outlook, should we assume that the net debt for the company will rise very sharply by the end of this financial year? That's what we mentioned earlier. By the end of the year, probably we may come to the same levels as we were in the last year. Dr. Frans also mentioned the fact that if the government dues do not come in time, probably it may still rise. But if the government dues are coming in regularly as it is, then probably we may be in the same way. No, but sir, our CapEx is also pending. INR 15,000 crore CapEx is also- Around the INR 15,000 odd crores is pending, and we will be able to do it. At the same time, we'll have some internal resources also being generated during the second half. Second half, you will have dividend payments as well- Yeah which were not there in the first half. Yeah. So this means that given those things, we should assume a very sharp increase in the debt levels going forward. At the end of the year, yes, we may. Then it may come down. So that all depends upon government dues, to what extent they are sort of settled. After this INR 9,800 crores, in fact, in the second half after September, we have also received about some further payments from government towards the dues. But then that depends upon what are the budgetary provisions with them and how much they can give to us before 31st March. Sir, total how much they have given for this year, and how much is outstanding as of now? Sir, at the beginning of the year, it was INR 19,000 crore. They have given about INR 16,000 crore in this year. They have already given INR 16,000 crore? Correct. How much is outstanding for now? As of now, INR 9,800 crores is outstanding. INR 9,800 crores. Yeah. Okay then. Thank you a lot, sir. Thank you, sir. Next question comes from Mr. Nitin Tiwari from Antique Stock Broking. Please go ahead, sir. Hi. Good evening, sir. Thanks for taking my question. It is related to actually the privatization news that we are hearing in media right now concerning BPCL. Sir, just wanted to understand that, have you had any discussions with government, or have they given any indication around how the pricing would be taken care of if one of the companies out of three gets privatized? I am talking about the retail fuel pricing, petrol and diesel. As of now, all three companies, in a way, coordinate the pricing, especially if crude moves up or there are any political events like elections, et cetera. What happens in the case when one company is privatized and the other two are not? If you can give some thoughts over there. Yeah. On the first part, we are also reading from the newspapers only. I will not be able to comment anything till we sort of get some official communication on that. As regards pricing, all companies are independent of pricing, actually. Why you say so is perhaps because there is a set formula of import parity or trade parity pricing, which every company Right is following. I do not see any disturbance in that if one or two companies are privatized. All right, sir. Thanks for that. Thank you, sir. Next question comes from Ms. Nafisa Gupta from Bank of America. Please go ahead, ma'am. Thank you, sir. My question to you is- Sorry to interrupt, ma'am. Could you please be a bit loud, ma'am? Your voice is not audible. Yeah. Can you hear me now? Yeah, you are audible. Please go ahead. Thank you. My question is on disinvestment as well. I just wanted to know if there is any news of GAIL being sold off, or parts of GAIL being sold off. My second question is that the petchem sales are also down year-over-year basis almost 30%. Is that also due to shutdowns, or are we seeing lower demand in petchems on an industry level? On GAIL, I think a lot is being talked about in the media also, and we also understand that there is a move for bifurcation of GAIL. I think Chairman GAIL was in media this morning also saying that perhaps they will finalize the bifurcation by the end of this fiscal. We are also hearing from the media only. Your second question was on the petchem margins. As we mentioned, our PTA plant was under shutdown for the full first quarter, and it resumed for part of the second quarter. That is why our petchem margins are lower. Spreads for petchem were also lower. While from operational angle, we will be stable from the next quarter, but the prices will be a big factor to watch. Sir, the demand, the sales volumes for petchem? That is down because our sales are down because our plants were down. Got it. Not because of a demand issue. No. Sir, on the refinery, just wanted some clarity and guidance on the coming few quarters. Do you see refining margins being subdued due to more shutdowns and lower cracks in the coming few quarters as well? As mentioned, we already had some shutdowns in the previous quarters also, and we will have some shutdowns in the coming quarters. So if the prices remain the way they are, we expect our GRMs also to be at the normalized levels. Inventory gains and losses are something to be seen. They depend upon the international prices. Good, sir. Thank you. Thank you, ma'am. Next question comes from Ms. Harleen from Bank of Baroda Capital Markets. Please go ahead. Hi, sir. Thanks for the opportunity. I just wanted your take on the new policy announced about the opening of the licenses of petroleum sales. Okay. Could you be more precise? What is your question? I said I wanted your take on the opening of the licenses of petroleum sales in the retail outlets. That is what I wanted. My take with respect to what, say? Your take as for what you think will happen to the market share. Fine. This is an opportunity which is given to, say, entrepreneurs, wherever their net worth is INR 250 crores or above, they are free to have retail selling of petrol and diesel. Now, we believe that despite this requirement of investment of INR 2,000 crores has been sort of removed, but still it will be very challenging for anybody to set up a retail outlet because fluctuation in prices are there. I do not know how they will weather that price fluctuation. A big company like us, an integrated company like us, can definitely weather that storm and ensure that the market prices are stable. It may be very difficult for a private small player to do that. Let us see how the thing unfolds. And sir, my second question and last one is, what does your diesel and fuel oil slate look like ahead of the IMO? We have already started producing IMO compliant FO, and our first parcel was dispatched on 26th of October, and we will be selling it through Kandla and Kochi to begin with, and later on from all ports. So we will be producing about 1 million metric ton per annum from our Gujarat refinery. So I think we are the only producer of IMO compliant fuel in the country. All right. Thank you, sir. Back to my side. Thank you, Ma'am. Next question comes from Varatharajan from Systematix. Please go ahead, sir. Thank you. Sir, any guidance on the polypropylene plant ramp-up and at what rate it effectively operated in the last quarter, and how it will ramp up in the future? While exact numbers in quantity terms I do not have, the first train was commissioned and it is operating. So perhaps more details we can subsequently provide to you. No problem, sir. My second question was, you have this breakup in terms of EBITDA contribution, the other segment, what all goes into that, sir? Gas. Others will have E&P, gas, solar, wind, et cetera. Those are small business segments of IOCL. Fair enough, sir. Thanks. Thank you, sir. Next question comes from Mr. Sumit Vora from Swiss Finance. Please go ahead. Hi, sir. Very good evening. Sir, I am just thinking aloud, but the matter of fact is that you mentioned that we have some amount of CapEx, we have dividend payouts, and our profits in the first half comparatively are lower than the first half of last year. Do you think that, sir, we could expect that to offset the lower refining, we can actually look at a sharp increase in marketing EBITDA since IOC is predominantly a very large market share player. Can we expect a sharp increase in marketing EBITDA from you now? But that sharp increase would come only from the volumes, and volumes will depend upon the market. I do not think we can do that through pricing. Okay. And sir, if you can just throw some light on the volume growth, because we saw some subdued demand in the month of September. Are you seeing an increase in volumes for petrol and diesel? Q2 is generally lower than Q1 because of the monsoons. Okay. So we expect the demand to pick up now in the next quarters. Okay. So sir, if you can share, are there any numbers for October you have? Sorry to interrupt, Mr. Sumit. For petrol, diesel? Could you please join back the queue for further questions, sir? Okay. Thank you. Next question comes from Mr. Manikandan Gare from Axis Capital. Please go ahead, sir. Hi, sir. Thanks for taking my question. Can you please update us on the Ennore LNG terminal, the status of that, as well as the regasification charges that you are asking the customers on that? See, we cannot reveal the regasification charges to you right now. What we can tell you is that we have already signed three gas sale agreements with anchor customers for supply of LNG from Ennore terminal. More are yet to come because the pipeline is yet to be totally in place. Till such time, we will not be having the full capacity. Once the pipeline comes into place, we will be having it by 2021. Of course, CPCL is one of our subsidiary to which we have already commenced, and Madras Fertilizers, Tamil Nadu Petroproducts, these are some of the companies with which we have got agreements. Present utilization of the terminal is about 15%, and only because of the pipeline problem, the capacity ramp-up is not possible immediately. We are expecting the pipeline to be complete by, say, end of next calendar year, that is December 2020 or maybe max at March 2021, by which time it will be fully operational. In between also, as and when the line progresses, we will sort of ramp up these quantities. Understood, sir. Thank you so much. Thank you, sir. Next question comes from Sarfaraz from MOSL. Please go ahead. Yeah. Hi, sir. Thank you for the opportunity. I just wanted to understand the tax part. Which plants enjoy MAT credit and how long the company will enjoy it, I mean, the tenure for it? Ma'am, can I put down? As you know, legally it is allowed for 10 years carry forward. Our all our MAT are one year or two year old. That's not an issue with us. And sir, which plants enjoy MAT credit? Can you please elaborate? All CAPRs. Which plants? No, MAT credit is on a company level. It is not plant-specific. Okay. Thanks a lot. Thank you, sir. Next question comes from Vidyadhar Ginde from ICICI Securities. Please go ahead. Next question comes from Vidyadhar Ginde from ICICI Securities. Please go ahead, sir. Nidar has already finished his questions. Yeah. Sir, it looks like the line is not active. Yeah. Yeah. Next question comes from S. Ramesh from Nirmal Bang Securities with a follow-up question. Please go ahead, sir. Thank you once again. Can you share some light on the current run rate for gross refining margin? Because we see a lot of volatility. The Asian margins are down. What is the current run rate for GRMs? Current run rate means we just declared the Q2 results, and now we will have to wait for the Q3. Yeah. In the month of October, can you share some insight? No, we do not do on a monthly basis. Yeah, okay. We do not disclose on a monthly basis. I understand. Secondly, on the LNG business, the GSA you have signed, are you following a fixed utility model like Petronet LNG? What is the kind of pricing you are enjoying for the gas you are sourcing from wherever you tied up the LNG? Gentleman, Mr. Ramesh, I think we will not be able to disclose the pricing and other factors over here on this call right now, because I do not think that would be the right approach for us to inform about the pricing and the strategies and the tenders that we have and the contracts that we have about sourcing and supply and so forth. No, that is fine. No, in terms of the Yes, we do. Of course, it has to be economical. Naturally, it is a business organization. We have to take business calls which are economically feasible and financially viable, and that is how the contracts do work out. No, I just want to understand, is the Ennore terminal going to be based on a fixed IRR model like Petronet LNG is following for the pricing? Yeah. Okay. Thank you very much. That is fair enough. Thank you, sir. Next we have a follow-up question from Pinakin Parekh from JP Morgan. Please go ahead. Yeah, thank you very much. Sir, IOCL is one of the promoter entities of Petronet LNG, and recently Petronet LNG signed an MoU with Tellurian in the U.S. And they have said that while they are committed to 1 million ton of LNG sourcing from the U.S., they are willing to go to 5 million tons, if Petronet's promoter entities would be interested in off-taking that gas. So would IOCL be interested in tying up with Tellurian or Petronet to source additional gas from the U.S.? Because the MoU apparently is going to expire in March, so in the next few months, a decision would need to be taken. Petronet LNG is a listed company, so we will not be able to comment anything on their behalf. Sir, will IOCL be interested in sourcing gas from the U.S. and Tellurian? We keep on exploring various alternatives. Whatever is economically beneficial, we will take a decision. Understood, sir. Thank you, sir. Next question comes from Reena Shah from Ashika Stock Broking. Please go ahead. Hello? Yeah. Hello. Yeah. I wanted to ask any major pipeline projects in hand, and any completions we can expect in 2020 or 2021? Definitely. The major pipeline that we are having is the Ennore-Madurai, including this RLNG pipeline that we are talking about. Of course, it's not going to be commissioned this year, but of course, next year. Then we have the Paradip-Hyderabad pipeline also. We have a Koyali-Solapur pipeline going on. These are some of the pipelines which are right now, and going forward, we have got some augmentation of pipelines that is already there. Those are the ones which will be there. But I don't- What are capacity additions in this pipeline? Going into too much of integrity, ma'am, I think we'll have to answer that separately. My team would take care. Mr. Avinash Singhal, you can get in touch with him. He'll give you the details. Usually, what we do is that we prepare also for the accounts and the results thereof. Anything very relevant to that would also be answered, but once you get into the CapEx and projects and infrastructure, probably then we'll have to go back and get the numbers. Okay, no worries. That's it from my side. Okay. Thank you, ma'am. This would be the last question for the day. I would now like to hand over the floor to Mr. Bhavin Gandhi for closing comments. Over to you, sir. Thank you. On behalf of Batlivala & Karani, I thank you everyone for participating in the call. You can end the call now. Thank you. Thank you very much. Thank you, sir.